Question 201.— John Johnson gives his cheque to James Peterson, and subsequently instructs his bank to stop payment. Cheque is presented by mail by a second endorser, Peter Smith. The bank writes, " payment stopped," on face of cheque in red ink. Since cheque was the property of Peter Smith, was the bank justified in mutilating it ?"

Answer.—It would have been more discreet for the bank to have pencilled the reason for refusal on the back of the cheque as usual. Nevertheless, the holder's rights are in no way prejudiced by the so-called mutilation.

The difficulty would not have arisen had the cheque been protested.